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Nifty : 21666

Technical Outlook

Day that was…

Equity benchmark took a breather after recent up move amid elevated volatility. The Nifty settled Tuesday’s session at 21666, down 76 points or 0.35%. Market breadth turned slightly negative with A/D ratio of 1:1.1. Sectorally, pharma, metal, Oil & Gas remained in limelight while IT, financials, auto took a breather

Technical Outlook

• The index started the session on a subdued note and gradually inched downward. However, supportive efforts in the second half of the session helped index to par some of intraday losses. The daily price action formed a bear candle with lower shadow, indicating breather after recent sharp up move.

• Going ahead, we expect index to trade with a positive bias and gradually head towards psychological mark of 22000 in the coming weeks. Key point to highlight is that, % of stocks above 200 days EMA have surpassed 90% mark indicating overbought conditions. However, we expect positive momentum would continue as long as index maintains higher high-low on weekly chart. Thus, any temporary breather ahead of Q3 earning season should not be construed as negative instead dips should be capitalized as incremental buying opportunity as we believe strong support is placed at 21300. Our positive bias is further validated by following observations:

• A) Revival of upward momentum in the financial and IT sector which carries 50% weightage in Nifty provides impetus for extension of ongoing up move

• B) Global market setups becomes more supportive as US and European indices are coming out of two years of consolidation

• C) Declining yields, and stable currency (INR/USD) along with strong institutional flows would act as tailwinds

• The elongation of rallies followed by shallow retracement exhibits inherent strength that makes us confident to revise support base at 21300 as its is confluence of 61.8% retracement of past six sessions up move (20977-21834) coincided with last week’s low of 21329

Nifty Bank: 47761

Technical Outlook

Day that was :

The Nifty Bank index was subject to profit taking for third session amid weekly Finnifty expiry . Nifty Bank index closed the session at 47761 , down 472 points or 1 % for the day .

Technical Outlook :

• The price action for the day formed a bear candle with lower high -low indicating profit taking near life highs amid overbought conditions . Index needs to form a higher high -low to indicate pause in current profit taking spell . Ongoing breather would make market healthier from medium term perspective

• Going ahead, we expect index to gradually head towards 49000 levels in coming weeks . However, taking note of overbought readings (weekly stochastics of 92 ) we do not rule out marginal profit taking, hence recommend to adopt buy on dips strategy • Meanwhile, we revise short term support to 47000 being last week’s lows that coincide with rising 20 -day ema (46937 ) which we expect to hold

• Structurally, index formed a higher bottom after strong breakout above 46300 levels in faster time highlighting robust price structure and elevated buying demand . Further, participation of both private/public sector banks make the rally more dependable with large caps being in focus

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